Bachelor's Thesis

Modeling and Simulation of Incentive Mechanisms in Ethereum

Final Thesis 1.28 MB

Author of thesis: Ing. Tereza Burianová

Acad. year: 2021/2022

Supervisor: Ing. Martin Perešíni

Reviewer: Ing. Jan Fiedor, Ph.D.

Abstract:

The topic of this thesis is the Ethereum incentive mechanism, in particular the changes introduced in EIP-1559. The aim of the thesis is to investigate the behaviour and propose any potential improvements in case of discovered flaws. The previously used first price auction mechanism required users to choose the incentive arbitrarily, which led to overpaying and high fee volatility. These problems occurred mainly due to higher network utilization after the popularization of projects such as decentralized finance, NFT collections, and the metaverse. The new incentive mechanism introduced the variable block size, which can adapt to the current network usage. Base fee, a value that indicates the minimum fee needed to include the transaction in the block, is then calculated based on the utilization of the previous block, making the fees more predictable. Several simulation experiments were proposed to investigate the typical behaviour and possible weaknesses of the mechanism. Finally, a possible improvement was found, and future research was proposed. The goals of the thesis were achieved, and the results were presented in the thesis.

Keywords:

blockchain, cryptography, Ethereum, incentive mechanism, EIP-1559, London Hard Fork, modeling and simulation, base fee, block utilization, gas price volatility, tokens, ETH burn, Ethereum network congestion, DeFi, NFT

Date of defence

13.06.2022

Result of the defence

Defended (thesis was successfully defended)

znamkaCznamka

Grading

C

Process of defence

Studentka nejprve prezentovala výsledky, kterých dosáhla v rámci své práce. Komise se poté seznámila s hodnocením vedoucího a posudkem oponenta práce. Studentka následně odpověděla na otázku oponenta. Komise se na základě posudku oponenta, hodnocení vedoucího, přednesené prezentace a odpovědí studentky na položené otázky rozhodla práci hodnotit stupněm C.

Otázky u obhajoby:

  • Provedené experimenty nepředpokládají selhání transakcí, bylo by možné generalizovat získané výsledky pro případy, kdy transakce mohou selhat, nebo tyto experimenty upravit, aby braly v potaz i možnost selhání transakcí?

Language of thesis

English

Faculty

Department

Study programme

Information Technology (BIT)

Composition of Committee

doc. Ing. Vladimír Janoušek, Ph.D. (předseda)
doc. Ing. Lukáš Burget, Ph.D. (místopředseda)
prof. Ing. Jan M. Honzík, CSc. (člen)
Ing. Vojtěch Mrázek, Ph.D. (člen)
Ing. Jaroslav Rozman, Ph.D. (člen)

Supervisor’s report
Ing. Martin Perešíni

Grade proposed by supervisor: B

File inserted by supervisor Size
Hodnocení vedoucího [.pdf] 86,67 kB

Reviewer’s report
Ing. Jan Fiedor, Ph.D.

Grade proposed by reviewer: C

File inserted by the reviewer Size
Posudek oponenta [.pdf] 91,36 kB

Responsibility: Mgr. et Mgr. Hana Odstrčilová